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Forces loyal to the Government of the National Accord (GNA) reportedly retook al-Azizyah, 45 kilometres (28 miles) south of Tripoli, from the Libyan National Army (LNA).
Footage filmed inside al-Azizyah on Tuesday shows GNA troops stationed in the town with heavy vehicles including tanks.
Fighting around the Libyan capital Tripoli has escalated since the beginning of the month, as forces loyal to LNA commander Khalifa Haftar have mounted an offensive to take the city.
The LNA, which controls eastern Libya, is seeking to win territory from the UN-backed GNA, whose capital is Tripoli. The country has been split between the two rival governments since 2014.
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